3M linrm? .I.it (Erin i MINORITY WOMENS STATE OF WASHINGTON OFFICE OF MINORITY AND BUSINESS ENTERPRISES 210 11TH AVENUE SW, SUITE 401 PO BOX 41160 OLYMPIA, WASHINGTON 98504-1160 (360) 664-9750 TOLL FREE 1-866-208-1064 FAX (360) 586-7079 June 27, 2014 VIA EMAIL AND CERTIFIED MAIL Ralph Taylor Orion Insurance Group 4208 198th St SW Sute 201 nwood, WA 98036 File Number: 22999 Dear Mr. Ralph Taylor, Thank you for completing and submitting the Disadvantaged Business Enterprise (DBE) Certi?cation Application. The Office of Minority and Women's Business Enterprise (OMWBE) has the responsibility for ensuring that only ?rms that fully meet the Regulation's eligibility requirements are permitted to participate as DBEs. Recipients (OMWBE) must determine the eligibility of ?rms consistent with the standards for certi?cation and firms wishing to participate as a DBE must meet all requirements of regulation 49 CFR Part 26. The applicant firm bears the burden of demonstrating to the recipient by a preponderance of the evidence that it meets all regulatory criteria for certification including disadvantaged status of owners, ownership and control. If the applicant fails to meet any requirement of the DBE program, it is ineligible for certification and the recipient is required to deny the application and must issue a written decision to the firm. We regret to inform you that based on the information you provided, it is our determination that your business does not qualify as a DBE under Title 49, Part 26 of the Code of Federal Regulations (CFR). This is your notice of the Office?s decision to deny certification of Orion Insurance Group (Firm). The specific reasons for the denial are issues regarding group membership, which are addressed as follows: Group Membership OMWBE received a DBE certification application from the Firm on March 31, 2014. This application was submitted after the Firm was certified as a Minority Business Enterprise for Washington State?s certification program. The laws governing the state and federal certification are different. While OMWBE has reviewed an application by your Firm to the Washington State MBE program, that certification is not binding on the Federal DBE certification program. OMWBE considered the supporting documentation submitted with the Washington State MBE certification application to streamline the DBE certification process. According to the DBE certification application, the Firm was established June 5, 1995 by Ralph Taylor. In the Ownership section of the DBE certification application, under question Mr. Taylor checked the boxes for Black and Native American in regards to his ethnic group membership. As provided for in 49 CFR 26.63, OMWBE is questioning whether Mr. Taylor is a member of the Black American and/or Native American groups as the terms are defined in 49 CFR 26.5. DNA, Ancestral, and Anecdotal information regarding Mr. Taylor?s claim of membership in the Black American group was provided with the Washington State Minority Business Enterprise certification application. The Ancestry by DNA 1of7 test provided lists Mr. Taylor?s biogeographical ancestry as the following: 90% European, 6% Indigenous American, 4% Sub-Saharan African, and 0% East Asian. The DNA test for Mr. Taylor?s father that was also submitted was dated March 18, 2011, and it llsted Mr. Taylor?s father?s biogeographical ancestry as the following: 44% European, 44% Sub- Saharan African, 12% East Asian, 0% Indigenous American. OMWBE had questions about the validity of these tests because the results for Mr. Taylor and his father are highly inconsistent. No DNA test information was provided for Mr. Taylor's mother. Further, OMWBE reviewed the Ancestry by DNA website. Under the Frequently Asked Questions section, the website provided the following regarding the accuracy of the test results: The scientists who developed the test have conducted extensive validation studies with various numbers of markers to create a test that was economically feasible as well as provides the most robust statistical data. The first version of the test used 71 markers?today we test 176 markers to obtain a much higher confidence level while keeping costs to a minimum. In a validation study that used a simulated 100% European population, for example, the test results showed less than 3.3% of total average contribution from African, Indigenous American, and East Asian ancestry, indicating the level of ?statistical noise that is to be expected from the results. There is a 3.3% statistical noise associated with each test. Eliminating the statistical noise from the DNA test results that Mr. Taylor provided would indicate that Mr. Taylor?s ancestry is 3% Indigenous American and 0.7% Sub-Saharan African. While these very low figures may be sufficient to establish ancestry, the low figures combined with the inconsistencies with the results for Mr. Taylor?s father cause OMWBE to question the validity of the test results. Additionally, from reviewing the information on the Ancestry by DNA website, it is unclear if the website?s use of the term Sub-Saha ran African corresponds to the definition of Black American in the CFR, which refers to "persons having origins in the Black racial groups of Africa.? Multiple documents regarding Mr. Taylor?s ancestry were provided with the Washington State MBE certification application. One document was a 1916 death certificate for a woman identified as ?Negro" who was about 86 years old when she died. The other documents provided did not establish that this woman was an ancestor of Mr. Taylor?s. In accordance with 49 CFR 26.63, OMWBE requested additional evidence to support membership in the Black American group. OMWBE also requested additional evidence to support membership in the Native American group, as the previous certification application for Washington State certification listed Mr. Taylor?s race as Black and Caucasian. In an email to OMWBE dated 5/21/2013, Mr. Taylor stated the following about the information provided: Thank you for inquiring about my lineage that supplied to you. That documentation was provided to me by the Rockingham VA Historical Society. As you can see the records are a piecemeal attempt to provide me with my lineage. I was provided the data as possible descendents from my past. Unfortunately records are not readily available going back hundreds of years in that area of the nation. A large number of record depositories were burnt during the civil war so it is hard for someone to piece something together. I would consider the individual Edwina to be somewhere in my lineage, a grandmother or relative possibly six to eight generations removed. In response to an additional information request regarding his claim of Native American heritage, Mr. Taylor provided a narrative dated May 27, 2014 where he stated that being Native American was frowned upon In his ancestral home of Virginia. Thus, indicating that he has no ancestral records of Native American roots. None were provided to OMWBE. Mr. Taylor submitted two letters of recommendation that were written in 2010. Both writers stated that they recognize Mr. Taylor as being of mixed heritage, but they did not specify which racial group Mr. Taylor identifies with. 20f7 The first author stated that he has known Mr. Taylor for 10 years, and the second author stated that he has known Mr. Taylor for approximately 15 years. Further, Mr. Taylor submitted a letter dated April 12, 2013 from counsel that stated the following, ?Mr. Taylor did not discover until later in his life, the full extent of his heritage, which includes Caucasian, Black, Native American.? According to Mr. Taylor?s driver?s license, he is over 50 years old. Last, in response to an additional information request about his cultural community, Mr. Taylor stated that he is a member of the NAACP, that he has a subscription to Ebony magazine, and that he is concerned about Black social issues. In answer to a question about social and economic disadvantage in the same request, Mr. Taylor explained that he was ill as a child; that his father was a Vietnam Veteran; and his father suffered from post-traumatic stress that caused his father to abuse Mr. Taylor. The documentation that Mr. Taylor provided was insuf?cient to prove that he has held himself out to be a member of either group over a long period of time prior to the application. Additionally, the documentation was insufficient to prove that Mr. Taylor is regarded as a member of either group. 0 Mr. Taylor submitted a birth certi?cate that did not indicate race, so this document failed to prove that he is a member of a minority group, or regarded as a member of a minority group. I Mr. Taylor provided documentation of a Negro woman he claimed is an ancestor. This documentation is incomplete and does not prove that the individual is an ancestor of Mr. Taylor. Even ifthe individual is an ancestor of Mr. Taylor?s, it fails to prove that he is a member of a minority group, or regarded as a member of a minority group. I Mr. Taylor submitted a DNA test to prove he is 4% Sub-Saharan African and 6% Native American. The test results for Mr. Taylor and his father are highly inconsistent and incomplete. Half of a son?s DNA comes from his father and half comes from his mother. OMWBE acknowledges that the pieces of DNA from each parent are random and will not equal exactly half from each parent. The two DNA tests between father and son should; however, be related. Without a complete picture of Mr. Taylor?s mother?s DNA, OMWBE contends that the tests are not reliable to determine ethnicity. This information fails to prove that Mr. Taylor is a member of minority group, or regarded as a member of a minority group. . Also, there is a 3.3% statistical nolse associated with each test performed by Ancestry by DNA. Eliminating the statistical noise from the DNA test results provided would indicate that Mr. Taylor? 5 ancestry is 2.7% Indigenous American and 0.7% Sub-Saharan African. Additionally, from reviewing the information on the Ancestry by DNA website, it is unclear if the website's use of the term Su b-Saharan African corresponds to the definition of Black American in the CFR, which refers to "persons having origins in the Black racial groups of Africa.? Regardless, the low figures combined with the inconsistencies with the results for Mr. Taylor and his father render the test as insufficient to prove that Mr. Taylor is a member of a minority group, or regarded as a member of a minority group. II Mr. Taylor submitted two letters where the authors state they consider Mr. Taylor to be of mixed heritage, however, they do not identify Mr. Taylor as Black or Native American. These letters do not establish that Mr. Taylor, who is visually identifiable as Caucasian, is a member of a non-Caucasian group. Mr. Taylor has failed to meet his burden that he is a member ofa minority group, or regarded as a member of a minority group. 0 Mr. Taylor submitted insufficient evidence when he was asked in an additional information request about his membership in the Black and/or Native America group. The only substantive evidence provided was a statement that he is a member of the NAACP, has a subscription to Ebony magazine, and he Is very interested in Black social issues. All individuals, regardless of minority status, mayJoin the NAACP and subscribe to Ebony magazine, or be concerned about issues. This fails to prove that Mr. Taylor is a member of a minority group, or regarded as a member of minority group. 30f7 a Mr. Taylor submitted insufficient evidence when he was asked in an additional information request how he has experienced social and economic disadvantage. Mr. Taylor did provide evidence of illness and abuse caused by his father who suffered due to experiences in Vietnam, but these matters were unrelated to race and ethnicity. Thus, Mr. Taylor has failed to prove social and economic disadvantage in his individual case. Even if it were determined that Mr. Taylor was a member of a minority group under the federal regulations, the presumption of disadvantaged has been rebutted, and Mr. Taylor has the burden of proving that he is socially and economically disadvantaged. The evidence provided by Mr. Taylor does not show that he suffered such disadvantage. A birth certificate that is silent in regards to race does not show socially or economic disadvantage. I Incomplete ancestral evidence does not prove social and economic disadvantage. - A DNA test that is highly inconsistent and incomplete does not prove social and economic disadvantage. Letters from people that met Mr. Taylor in his thirties does not prove social and economic disadvantage. - Childhood issues partially due to a father who suffered after service in the Vietnam War does not prove social and economic disadvantage due to racial or ethnic prejudice or cultural bias. I Last, Mr. Taylor?s attorney wrote that Mr. Taylor did not discover the full extent of his heritage until late in life. It is nonsensical for Mr. Taylor to claim that he has encountered social and economic disadvantage due to a heritage he was not aware of until the DNA test conducted in 2010. Your application for DBE certification is denied. Concluslon The above reasons have been reviewed against the factors outlined in the following Codes of Federal Regulations {$26.61 How are burdens of proof allocated in the certi?cation process? In determining whether to certify a firm as eligible to partlcipate as a DBE, you must apply the standards of this subpart. The firm seeking certification has the burden of demonstrating to you, by a preponderance of the evidence, that it meets the requirements of this subpart concerning group membership or individual disadvantage, business size, ownership, and control. You must rebuttably presume that members of the designated groups identi?ed in ?26.67(a) are socially and economically disadvantaged. This means they do not have the burden of proving to you that they are socially and economically disadvantaged. In order to obtain the bene?t of the rebuttable presumption, individuals must submit a signed, notarized statement that they are a member of one of the groups in Applicants do have the obligation to provide you information concerning their economic disadvantage (see ?26.67). Individuals who are not presumed to be socially and economically disadvantaged, and individuals concerning whom the presumption of disadvantage has been rebutted, have the burden of proving to you, by a preponderance of the evidence, that they are socially and economically disadvantaged. (See Appendix of this part.) You must make determinations concerning whether individuals and firms have met their burden of demonstrating group membership, ownership, control, and social and economic disadvantage (where disadvantage must be demonstrated on an individual basis) by considering all the facts in the record, viewed as a whole. ?26.63 What rules govern group membership determinatlons? 4of7 If, after reviewing the signed notarized statement of membership in a presumptively disadvantaged group (see you have a well founded reason to question the individual's claim of membership in that group, you must require the individual to present additional evidence that he or she is a member of the group. (2) You must provide the individual a written explanation of your reasons for questioning his or her group membership and a written request for additional evidence as outlined in paragraph of this section. (3) In implementing this section, you must take special ca re to ensure that you do not impose a disproportionate burden on members of any particular designated group. Imposing a disproportionate burden on members of a particular group could violate ?26.7(b) and/or Title VI of the Civil Rights Act of 1964 and 49 CFR part 21. In making such a determination, you must consider whether the person has held himself out to be a member of the group over a long period of time prior to application for certification and whether the person is regarded as a member of the group by the relevant community. You may require the applicant to produce appropriate documentation of group membership. (1) If you determine that an individual claiming to be a member of a group presumed to be disadvantaged is not a member of a designated disadvantaged group, the individual must demonstrate social and economic disadvantage on an individual basis. (2) Your decisions concerning membership in a designated group are subject to the certification appeals procedure of ?26.89. Appendix to Part ??Individual Determinations of Social and Economic Disadvantage The following guidance is adapted, with minor modifications, from SBA regulations concerning social and economic disadvantage determinations (see 13 CFR 124.103lcl and 124 104). Social Disadvantage I. Socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias within American society because of their identities as members of groups and without regard to their individual qualities. Social disadvantage must stem from circumstances beyond their control. Evidence of individual social disadvantage must include the following elements: (A) At least one objective distinguishing feature that has contributed to social disadvantage, such as race, ethnic origin, gender, disability, long-term residence in an environment isolated from the mainstream of American society, or other similar causes not common to individuals who are not socially disadvantaged; (B) Personal experiences of substantial and chronic social disadvantage in American society, not in other countries,- and (C) Negative impact on entry into or advancement in the business world because of the disadvantage. Recipients will consider any relevant evidence in assessing this element. In every case, however, recipients will consider education, employment and business history, where applicable, to see if the totality of circumstances shows disadvantage in entering into or advancing in the business world. (1) Education. Recipients will consider such factors as denial of equal access to institutions of higher education and vocational training, exclusion from social and professional association students or teachers, denial of educational honors rightfully earned, and social patterns or pressures which discouraged the individual from pursuing a professional or business education. (2) Employment. Recipients will consider such factors as unequal treatment in hiring, promotions and other aspects of professional advancement, pay and fringe benefits, and other terms and conditions of employment; retaliatory or discriminatory behavior by an employer or labor union; and social patterns or pressures which have channeled the individual into non-professional or non-business fields. 5of7 (3) Business history. The recipient will consider such factors as unequal access to credit or capital, acquisition of credit or capital under commercially unfavorable circumstances, unequal treatment in opportunities for government contracts or other work, unequal treatment by potential customers and business associates, and exclusion from business or professional organizations. II. With respect to paragraph of this appendix, the Department notes that people with disabilities have disproportionately low incomes and high rates of unemployment. Many physical and attitudinal barriers remain to their full participation in education, employment, and business opportunities available to the general public. The Americans with Disabilities Act (ADA) was passed in recognition of the discrimination faced by people with disabilities. It is plausible that many individuals with disabilities?especially persons with severe disabilities significant mobility, vision, or hearing impairments)-may be socially and economically disadvantaged. Ill. Under the laws concerning social and economic disadvantage, people with disabilities are not a group presumed to be disadvantaged. Nevertheless, recipients should look carefully at individual showings of disadvantage by individuals with disabilities, making a case-by-case judgment about whether such an individual meets the criteria of this appendix. As public entities subject to Title II of the ADA, recipients must also ensure their DBE programs are accessible to individuals with disabilities. For example, physical barriers or the lack of application and information materials in accessible formats cannot be permitted to thwart the access of potential applicants to the certification process or other services made available to DBEs and applicants. Economic Disadvantage (A) General. Economically disadvantaged individuals are socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit Opportunities as compared to others in the same or similar line of business who are not socially disadvantaged. (B) Submission of narrative and financial information. (1) Each individual claiming economic disadvantage must describe the conditions which are the basis for the claim in a narrative statement, and must submit personal ?nancial information. (2) [Reserved] (C) Factors to be considered. In considering diminished capital and credit opportunities, recipients will examine factors relating to the personal financial condition of any individual claiming disadvantaged status, including personal income for the past two years (including bonuses and the value of company stock given in lieu of cash), personal net worth, and the fair market value of all assets, whether encumbered or not. Recipients will also consider the ?nancial condition ofthe applicant compared to the financial profiles ofsmall businesses in the same primary industry classification, or, if not available, in similar lines of business, which are not owned and controlled by socially and economically disadvantaged individuals in evaluating the individual's access to credit and capital. The financial profiles that recipients will compare include total assets, net sales, pre-tax profit, sales/working capital ratio, and net worth. (D) Transfers within two years. (1) Except as set forth in paragraph ofthis appendix, recipients will attribute to an individual claiming disadvantaged status any assets which that individual has transferred to an immediate family member, or to a trust, a beneficiary of which is an immediate family member, for less than fair market value, within two years prior to a concern's application for participation in the DBE program, unless the individual claiming disadvantaged status can demonstrate that the transfer is to or on behalf of an immediate family member for that individual's education, medical expenses, or some other form of essential support. (2) Recipients will not attribute to an individual claiming disadvantaged status any assets transferred by that individual to an immediate family member that are consistent with the customary recognition of special occasions, such as birthdays, graduations, anniversaries, and retirements. (3) In determining an individual's access to capital and credit, recipients may consider any assets that the 6of7 individual transferred within such two-year period described by paragraph of this appendix that are not considered in evaluating the individual's assets and net worth transfers to charities). This decision is based on the speci?c grounds listed above. A buslness is not certifiable if any one reguirement of the DBE program is not met. OMWBE reserves the right to add additionajgrounds for this decision. You have the right to appeal this decision. The following outlines the appeal procedures. Federal Appeal Procedure Pursuant to 49 CFR of Subpart E, an administrative appeal of this decision must be made directly to the United States Department of Transportation (USDOT). If you choose to appeal to USDOT, your request must be in writing and mailed to the address below within ninety (90) days from the date of this denial letter. The request must explain in detail the reasons you believe the Office's determination should be reversed and include copies of all documents that support your argument. Please direct your request to: US. Department of Transportation Department Office of Civil Rights External Civil Rights Programs Division (5-33) 1200 New Jersey Avenue SE Washington, DC 20590 If you do not submit an appeal, the denial will be ?nal and you will have no further appeal rights. If you would like to reapply for certification, pursuant to 49 CFR you may submit a new application (with supporting documentation) 12 months from the date of receipt of this letter. If you have any questions, please call me at (360) 664-9776. Sincerely, fr?dwina Martin-Arnold %j?W ?Assistant Director of Communications and External Relations CC: Assistant Director of Operations John Huff, Washington State Department of Transportation Olga Peterman, Washington State Department of Transportation 7of7